AN UNDERWRITING GUIDE
Prepared by IMUA's
Construction, Installation & Contractor's Equipment Committee
Copyright 2008 © Inland Marine Underwriters Association
The Inland Marine Underwriters Association [IMUA] is a not-for-profit association focused on the commercial inland marine
insurance line of business. IMUA was organized in 1930 as a national trade association and rating bureau for all inland
marine classes. In 1948 the rating bureau activities of the IMUA were transferred to the Inland Marine Insurance Bureau
(now defunct) due to the 1944 US Supreme Court decision in the South-Eastern Underwriters Association case.
Today, IMUA is comprised of --
IMUA is committed to advancing the educational, governmental, regulatory
and technical interests of the commercial inland marine
- Members - insurance and reinsurance companies that underwrite a significant portion of the commercial inland marine
insurance in the U.S.
- Associate Members - companies or organizations that provide products and/or services to the insurance industry.
One of the services IMUA provides its members is the publishing of information for use by underwriters, loss control and claims
specialists, and other interested parties. The topics covered by IMUA Reports, Bulletins and News Articles are intended to
provide an overall awareness of the issues, hazards and exposures associated with a specific industry or inland marine class of
Volunteer members of a technical committee of the IMUA or IMUA staff have produced this information. Committee members comply
with all applicable laws including competition and trade regulations while compiling information.
It is generally not possible to treat any one subject in an exhaustive manner, nor is it IMUA’s intent to do so. No warranties
are made regarding the thoroughness or accuracy of the report or any part of it. Nothing in this report should be interpreted
as providing definitive guidance on any question relating to policy interpretation, underwriting practice, or any other issues
in insurance coverage.
IMUA does not prescribe to its members how to make underwriting or claims decisions, nor does it require that analysis follow
any particular format.
Modern cranes fall into two general functional categories - those employed in specific applications (e.g. manufacturing,
industrial, container and port cranes), and those used by the construction industry. For the purpose of this report, IMUA
will focus mainly on the construction industry.
The construction industry operates in one of the most dynamic and hazardous work environments. While there are numerous
factors behind construction site claims, cranes are involved in as many as one-third of all events. Cranes can be described
as the most important, most expensive, most problematic but least understood of all the pieces of contractor’s equipment
found on a construction site.
The basic engineering principles used in the construction of cranes involve the full spectrum of both mechanical and structural
design. While cranes share a common goal - the lifting or lowering of loads - the types and uses of cranes fall into a wide
array of applications. And these uses are subject to a number of environmental conditions and external forces including:
For the underwriter of this class of business, the proper analysis of each exposure can be a daunting challenge. To assist in
this task, the following paper is designed to provide a broad overview of the various elements of crane underwriting, as well
as to offer additional resources that may help expand one’s knowledge of cranes.
- Geographic location;
- Frequency of use; and
- Operator's experience and skill level.
II. TYPES OF CRANES
There are numerous manufacturers and models of cranes and they vary in size, use, lifting capacity and sophistication of
operating controls. As the needs of the various industries served by manufacturers change, so too does the nature of the
crane. The following represents a brief overview of the types of cranes and their characteristics that may help one determine
the risk and exposure.
MOBILE CRANE TYPES
This general category encompasses various types of cranes that can be classified as -
Mobile Cranes can then be further divided into two main groups -
- All Terrain Cranes
- Hydraulic Rough Terrain Cranes
- Hydraulic Truck Mounted Cranes
- Lattice Boom Truck Cranes
- Lattice Boom Crawler Cranes
- Industrial Cranes
- Boom Trucks/Knuckle Boom Cranes
Additional configurations of Mobile Cranes can also include tower and luffing tower cranes and heavy-lift mobile cranes.
- Telescoping [booms that can be extended, usually via hydraulic means]
- Lattice Booms [generally a fixed boom]
Basically, the operating characteristics of Mobile Cranes are the same as they all include the following:
OPERATOR ASSIST DEVICES
- Boom Lengths are adjustable (telescope and manual)
- Boom Angles are adjustable (booms are raised and lowered)
- Loads may be swung
- The cranes can travel around job sites under their own power
- All cranes are equipped with load moment devices that, when properly configured, will assist the operator in making
All cranes are required to be equipped with an anti-two blocking device that prevents the load from being raised into the
boom tip causing damage and possibly dropping the load.
All cranes are also required to have a load limiting device that is intended to prevent the crane operator from performing
any function that would cause him/her to exceed the rated capacity of the crane or putting the crane into any unsafe
configuration. Unfortunately, with the exception of tower cranes, this device may be easily bypassed or overridden and is
a leading cause of crane accidents.
The following pages will give a brief explanation of various types of cranes used in the construction industry.
The Rough Terrain Crane has basically been designed and built to facilitate travel across uneven, rough and broken ground
found on construction sites. To assist in this movement, they are fitted with oversize tires and most have 4x4x4 or 4
wheel drive and generally have 4 wheel steering making them highly maneuverable and capable of working in confined spaces.
They utilize outriggers to stabilize and level the crane during operation as shown in the picture. One disadvantage with
this type of crane is they cannot travel great distances on roads or highways, therefore they are often transported to and
from the job site on trailers.
The Rough Terrain Crane is designed for "Pick and Carry" operations, although they are still subject to the same restrictions
of operation as other Mobile Cranes. Capacities generally range between 10 and 100 tons.
Rough Terrain Cranes, like other types of truck-mounted cranes, utilize hydraulic telescoping booms, and may be supplied with
full power or pinned booms, swing away (lattice) boom extensions and telescopic "stinger" boom extensions. Rough Terrain Cranes
may also be fitted with ‘Cantilever’ (fold down) or "Box and Beam" (out and down) type of outriggers.
Rough Terrain Cranes can be fitted with two operator cab mountings:
Rough Terrain Cranes are popular with crane rental companies and general contractors because of their versatility, and
frequently are 'bare' rented (without operator).
- Cab Up (swing cab) - operator's cab is usually mounted in the center of the crane so that it revolves with the boom
- Cab Down (fixed cab) - the operator's cab is fixed [usually on the front part of the chassis] and does not rotate as the
crane boom rotate
TRUCK MOUNTED [TM]
HYDRAULIC OR LATTICE BOOM
Although known as a "Truck Mounted" Crane, these types of cranes are not mounted on a conventional truck chassis, but are
mounted on specially designed carrier frames designed to withstand the stresses of constant lifting and lowering of heavy
The Truck Mounted Crane can be supplied with either a hydraulic telescopic boom or a lattice boom configuration. Like the
Rough Terrain Crane, the telescopic boom can have full power or pinned extendable booms which allow the operator to extend
the main boom from the operating seat; in addition to the manually extended "swing-way" lattice extensions and telescopic
One advantage of the telescopic boom is it can be brought over the road at reasonable highway speeds to a job site and be
ready for work in a matter of minutes, whereas a lattice boom can take several hours and a lot of extra transport before
the crane is ready for operation. An advantage of a lattice boom crane is they generally have greater lifting capacities
at radius than a hydraulic crane of the same gross capacity. The hydraulic version has lifting capacities ranging from 25
to 110 tons. The lattice boom truck crane has capacities generally between 140 and 300 tons.
A disadvantage of the Truck Mounted Crane is it is not as compact as a rough terrain model, and therefore cannot maneuver
throughout refineries, plants and other confined spaces as easily because they are usually front axle steering only.
The Lattice Boom can be made longer or shorter by manually adding or removing boom sections. The boom sections can be
fitted in lengths from 10 feet to 50 feet. A jib extension may also be fitted to the main boom head. One major advantage
of a lattice boom crane is they generally have greater lifting capacities at radius than a hydraulic crane of the same
gross capacity due to the fact that the lattice boom is much lighter.
Both types of cranes are frequently rented 'operated and maintained' by the rental company.
All TERRAIN [AT]
Over time crane manufacturers recognized the advantages and disadvantages of maneuverability, road travel and rough
terrain capabilities, and took the best operating features of the Rough Terrain and Truck Mounted Cranes and combined
these features into one - the All Terrain.
This versatile carrier chassis design incorporates multiple drive, steering and floating axles that allow it to be
transported over the road at near highway speeds (40 - 50 MPH), and at the same time have excellent off-road handling
and maneuverability. In addition, crane manufacturers build suspension systems with the ability to increase the crane's
ground clearance for operations under poor job site conditions. These steering, drive and suspension systems give the
same operating capabilities as a rough terrain crane.
Lifting capacities on All Terrain Cranes exceed comparable truck-mounted cranes and can range from 60 to over 1000 tons
depending on the model.
Because this crane type has the ability to perform equally as good as the Rough Terrain and the Truck Mounted Cranes it
is fitted with outriggers to stabilize and level the crane, and utilizes hydraulic telescoping booms.
Crawler Mounted Mobile Cranes are available with either a telescopic boom or lattice boom upper works assembly. These
cranes are available with the same types of boom extension configuration as the aforementioned Truck Mounted, Rough
Terrain and All Terrain Cranes.
The lower works of these machines consist of a set of crawler tracks which provide their traction and stability. The
tracks are then mounted onto a car-body [chassis] onto which is mounted the cranes upper works. Certain types of crawler
cranes will have the ability to extend their tracks giving a wider base to increase stability and/or lifting capacity.
Heavy-Lift Crawler Cranes may have special attachments such as large extended counterweights to offset mast lengths and
increase lifting capacities.
While these cranes are considered mobile cranes, they are transported to and from the job site on trailers, and once at
the site, they crawl at very slow speeds. Their site mobility is very limited when traveling with long components of
boom, and this movement requires level ground. However, Crawler Cranes can adapt to job sites with poor ground conditions
since the crawler tracks help to spread the ground bearing pressure. Lifting capacities range from 500 to over 1750 tons.
As Crawler Cranes do not have outriggers to facilitate leveling of the crane, it is vital that the operator ensures a
level working surface is available when operating the crane. (ASME B30.5 Mobile Cranes limits out of level to a maximum
of 1% grade or 0.57 degrees.)
Crawler Cranes are rented both 'bare' and 'operated and maintained', and therefore are popular with crane rental companies
and general contractors.
BOOM TRUCKS/KNUCKLE BOOM
Variations in Boom Truck design are largely due to the advantages obtainable for the specific applications. One example
of a suitable design for a particular application is the "Knuckle Boom" crane. This type of crane is capable of handling
loads in confined space by using a 'hinged' boom design. The boom folds or "articulates" with hydraulic pressure and/or
winch drums and cables.
A second type of boom design utilizes hydraulic or articulating booms similar to other types of mobile cranes discussed
earlier. This type of boom can also have boom extensions such as "swing-aways" and/or manual extensions.
Unlike other types of mobile cranes, the Boom Truck is not mounted on a carrier which has been specially designed for
crane operations. They are usually mounted on a commercial truck chassis that has been strengthened to accept the crane.
Sometimes referred to as "Utility or Winch Trucks", the Boom Truck is the workhorse of maintenance crews and is particularly
useful where quick set up, load carrying and road travel are required.
Boom trucks are generally fitted with stabilizers or outriggers to give extra stability to the machine during lifting
operations. Frequently 'bare' rented, lifting capacities range from 15 to 60 tons. These types of units are popular with
small crane rental companies and equipment rental companies.
The Industrial or Carry Deck Cranes are generally light duty rubber-tired cranes designed and built for use in factories
and workshops where the travel and operating surfaces are significantly better than those found on construction sites.
These cranes can have a boom which can have no swing, partial swing or 360 degrees of swing. When used for 'pick and carry'
operations, they employ a carry deck built with a platform specifically for the carrying of loads, whereas the 'pick and
carry' crane is designed for lifting and traveling with the load suspended from the hook.
They utilize a hydraulic telescoping boom, winch and hoist ropes as part of the crane identical to those of some mobile
canes discussed earlier.
Industrial Cranes may have outriggers fitted for extra stability, and most have a low center of gravity which permits the
crane to operate in narrow factory aisles and runways, possibly without the assistance of outriggers.
The Industrial Crane is highly maneuverable and can have two or four wheel steering configuration. These cranes are
generally owned, but if rented, they are 'bare' rented.
There are various types of stationary cranes, but for the purpose of this report we will focus on tower cranes. Tower
cranes are a common sight at almost any major building construction site. These are the cranes with the tall central
shaft, a long horizontal boom and counterweights located behind the operator’s cab. Their main advantage is that the
operator and working boom are located above the construction site. These cranes generally are fixed horizontally; however,
some have luffing (boom can raise and lower) capabilities. Tower cranes arrive at the construction site on numerous trailer
trucks, and a mobile crane is used to assemble the mast sections (vertical section), boom (horizontal section), operator's
cab and counterweights. Most construction companies rent their tower cranes from a specialty company that handles the
installation and disassembly.
There are four general types of tower cranes:
Tower cranes sometimes fail, and the following have been established as some of the more common causes of failure:
- Tower Cranes - A hoisting device used in the erection of high-rise buildings, these type cranes that can either
be erected within the structure of the building or fastened to structural members on the building’s external skin. An
internal tower crane has a fixed configuration. Its vertical section remains the same length throughout the term of
the construction, and it rises via hydraulic jacks from floor from floor. The building structure is used to support
the weight of the crane, often in excess of 50 tons. External tower cranes rise with the building via a series of
climbing frame sections and hydraulic mechanisms.
The mast rises from a firm foundation or base, usually a pre-laid concrete pad in close proximity to the building, and
is affixed via large anchor bolts embedded in the concrete. As the building rises, additional climbing frames are added
[see picture] until the building is topped off. External tower cranes can rise hundreds of feet into the air, and the
horizontal boom can reach out over the structure. A trolley hangs under the boom capable of lifting and horizontally
moving everything from structural steel, concrete, building materials, to large HVAC equipment and various pieces of
- Stationary Cranes - A static or fixed crane, either free standing or supported by the structure itselfmounted on
a concrete base mooring via some other type of substantial mounting.
- Traveling Cranes - An otherwise static crane, usually with a bogie or rail-mounted undercarriage, usually on fixed
rail tracks, that allows the crane some degree of travel while under load The classic example of this type of crane is
the type used to load and off-load containers from marine vessels but tower cranes are sometimes mounted on these
traveling rail systems.
- Self-Erecting Tower Cranes - Relatively new to the North American market, these cranes are either towed or trucked
to a job site where they are capable of erecting themselves.
- Improper erection of the crane
- Improper bracing of the crane
- Lifting eccentric loads
- For internal climbing tower cranes, the building’s structure may not have been designed properly to support the weight of
the crane and its load
- Operator error whether from tampering with limit switches or other safety devices to not properly trained (Tower cranes
are not equipped with operator assist features that permit simple access to overriding the system. To override a tower
crane overload warning system typically requires tampering with the limit switches that are not accessible from the
- Use in high winds
III. EXPOSURES & GENERAL UNDERWRITING CONSIDERATIONS
POLICY TERMS AND CONDITIONS
Most insurance carriers, when insuring cranes provide coverage under a
Contractors Equipment Form along with the insured's other
equipment, either a form of their own design, or acceptance of a
broker’s form, or possibly even a form developed by an insurance
service provider, e.g. ISO or AAIS. In most jurisdictions Contractor’s
Equipment is a non-filed class of insurance, and this
gives the underwriter considerable leeway to tailor policies to fit each
Policy forms, while unique in design to each of the above entities,
generally have a common structure and some common elements as
TYPES OF RENTAL AGREEMENTS
- Covered Property or Property Insured:
This policy provision will state that the policy insures
contractors equipment and machinery, including spare parts, repair
parts, tools and accessories as specified in the declaration
section of the policy the insured owns, or property of others
held by the insured and for which the insured is liable. It is in
this area where coverage for cranes would be spelled out.
Coverage is granted on either a scheduled or blanket basis,
although it is common industry practice to specifically schedule
cranes irrespective of the method of scheduling.
- Covered Cause of Loss or Perils Insured:
Coverage for contractors equipment can be written on either a special form ["all risk"] basis or on a named perils basis.
Subject to market cycle conditions, ‘all risks’ is generally most prevalent, and this means the policy insures against "all
risk of a direct physical loss or damage to the insured property from any external cause, except as otherwise excluded."
Some contracts are written on a Named Perils basis or Specified
Perils basis, which states specific perils under which a loss
would only be covered. In most cases the common causes of loss
would include fire, extended coverage perils, vandalism &
malicious mischief, and theft.
There are four (4) types of valuations one may encounter when insuring Contractors Equipment (Cranes).
- Actual Cash Value or ACV
This is the most common basis where the carrier will pay the actual cash value [ACV] of the property - the cost to replace
or repair damaged equipment less depreciation and obsolescence. ACV is often difficult to assess on partial losses,
therefore one may find explanatory wording such as - and shall in no event exceed what it would then cost to repair or
replace the same with material of like kind and quality at the time of loss.
- Replacement Cost
Under this valuation method, the insurance carrier will pay not more than the replacement cost of the property insured
without any deduction for depreciation at the time the loss occurs. The replacement cost is limited to the cost of repair
or replacement with similar material of same like and function. Replacement cost valuation does not apply unless the
damaged or destroyed property is repaired or replaced.
- Functional Replacement Cost
The carrier will not pay more for loss or damage on a Functional Replacement Cost basis than the least of the following:
- The limit of insurance applicable to the lost or damaged property
- The cost to replace the lost or damaged property with other property that is of comparable material and quality or
used to perform the same function.
- The amount you actually spend that is necessary to repair or replace the lost or damaged property.
- Agreed Amount
All parties have agreed on the designated value of the property. This is done by appraisal and there is no coinsurance
Each Valuation basis described has different wordings based on the insurance carriers policies, or broker forms that are
These are examples of Valuation methods. Many carriers will grant
Replacement Cost Valuation on newer equipment and Actual
Cash Value on older equipment. Contractors Equipment that is
smaller equipment in value depreciates quickly than the larger
valued equipment depreciation. Overall, equipment will hold its
value longer if the equipment maintenance history is good, or
if there is a shortage or high demand for used pieces of a
particular type of equipment. It is not unusual to see certain types
of cranes still functioning forty (40) to fifty (50) years after
they were manufactured. Agreed Amount valuation generally will
be used on these types of cranes due to their longevity and demand
in lieu of ACV valuation.
As respects to cranes, a percentage deductible with a Minimum
Deductible dollar amount is often used by the insurance underwriter
in lieu of a dollar deductible. Common deductible percentages
range from 2% to 5% of the limit of insurance for items involved in
loss. How one applies a percentage deductible is a function of
individual company philosophy and market conditions, and is often
subject to a Minimum Deductible expressed as a dollar amount, e.g.
$2,500. Some insurance carriers may use a split deductible where
cranes may be part of an overall equipment schedule, e.g. $5000 for
equipment values <$100,000, and $10,000 for values >$100,000.
The Minimum Deductible will be predicated on the values that the
schedule of equipment represents. A flat deductible can range
anywhere from $2,500 and up depending on the size of the schedule
and insurance company philosophy.
Due to the high value of cranes, insurance carriers often impose
higher deductible percentages or flat dollar deductibles to make
sure the insured is safeguarding the operation of this high valued
equipment. Carriers look to insure that the operators of cranes
are experienced and educated on the equipment prior to them using
it. If not, the insured will be picking up a larger sum of the
loss due to the deductible imposed upon them.
Each company will approach this differently, and sometimes this
will vary between individual accounts. Coinsurance percentages vary
due to individual company underwriting guidelines, producer and
insured requests. Large schedules might receive less stringent
coinsurance percentages. One thing to keep in mind, the Valuation
Clause will have a determining impact, i.e. if a policy is
underwritten on an Agreed Value basis, then coinsurance does not
come into play
Again, since contractors equipment is not a filed class in most
jurisdictions, the construction of a policy’s Exclusion Clause is
subject to producer/underwriter/insured negotiation. For example,
as respects cranes, policies generally have a weight of load
exclusion that reads something like:
Weight of a load exceeding the applicable load rating of the
equipment according to the load rating chart published by the
manufacturer of the equipment
However, individual account level negotiations may bring this
exclusion into a covered peril area if the underwriter knows the
insured has established written policies and procedures as well as
When cranes are loaned or rented, with or without an operator, the
renter (lessee) is usually responsible for any and all damages
caused to the equipment while in its care, custody, and control. Most
Equipment Rental Companies will use a contract known as a
"Bare Rental" agreement. This agreement will contractually state what
the lessee is responsible for.
An issue which doesn't affect the insurance but should be reviewed is
who will be operating the crane? An operator who is an employee
of the owner (lessor) generally should have more experience with the
crane and its capabilities. An operator employed by the lessee,
may or may not have experience to safely operate the crane. Most "Bare
Rental" contracts will require the lessee to provide "competent
and experienced" personnel to direct the operation of the crane.
The owner (lessor) of the crane will require within the agreement, that
the lessee provide adequate insurance coverage for all lines
of insurance, including property/inland marine. The lessor will also
require the lessee to be named an. "additional insured" and be
a "loss payee" on the lessee's policy.
When insuring a contractor who owns, and either loans or rents his crane
to others, an underwriter should confirm what contracts are
being used and who is liable for damages. The contract agreement should
be signed by both parties to be legal. If the owner loans their
equipment, there may not be a formal contract in place. The insured
should have a written policy dealing with loaning equipment to others.
When a loss occurs involving a rented crane, the claims adjuster should
immediately review the rental contract to determine who is
financially responsible for the damage as these contractual agreements
are critical in order to have a true measure of the exposures.
When insuring a contractor who rents cranes, an underwriter should be
clear as to what type of equipment they rent and how often they
rent it. Unless specifically excluded, any rented equipment generally
will be covered to the policy limit or the rental sub-limit
stated within the policy.
CRANES AND WATERBORNE EXPOSURES
The waterborne exposure associated with the operation of cranes on a
barge presents unique underwriting concerns. In addition to the
majority of factors that face the underwriter on land-based use, there
are a set of other variables encountered when a crane is operated
on the water that need to be evaluated.
- POLICY CONDITIONS ENCOUNTERED
Most inland marine forms do not contemplate waterborne exposures
and will need to be amended if this exposure is a possibility.
As many unique underwriting exposures are present, consideration
for warranties might be reviewed. For example, the underwriter
might consider the undertaking of certain key segments of the
project only within the presence of an agreed upon, qualified marine
That is a vital consideration in underwriting any venture involving
a crane operation from a barge. A surveyor can identify key
elements of the vessel; equipment to be used; the type of lifts to
be made; anticipated weather and water conditions; as well as
marine traffic exposures; most of which are unique to a waterborne
exposure. A crane that is being moved by barge and/ or will be
working aboard a barge should be subject to inspection by a
competent Marine Surveyor. The Surveyor should be tasked with doing
a suitability survey of the barge and approving the load, stow
& securing methods of the crane aboard the barge, as well as
any operating limitations. All of these factors are interrelated
and a qualified surveyor can bring proper perspective to the project.
There are several types of surveys that can be requested of the marine surveyor -
- On Hire/Off Hire Survey - a survey that only documents
the condition of the barge when received, and compares it to the
condition of the barge when it is returned to its owner (off
hire). This determines what damage(s), if any, were incurred during
the charter period.
Note - The surveyor typically does not comment on the suitability of the barge for the intended service and is only documenting
- Suitability Survey - this additional service asks the surveyor to comment on the barge’s fitness for the intended service,
and often offers recommendations that the insured will need to comply with.
There are different transit scenarios that must be understood when
underwriting a waterborne exposure. If the insured owns the barge and
power unit (tug) in addition to the crane, then an analysis of the
transportation is needed any time the unit is transported from one job
site to another.
If non-owned equipment is used, the most common practice is to have
equipment leased for each job. One key question that needs exploration
- when will the insured’s responsibility for the equipment begin
and end? Responsibility could begin when the barge (with or without
equipment) is being transported to the job site or upon delivery to
the job site. The crane may or may not be included in the
which will result in the equipment being loaded on the barge at the
job site. The loading of the crane will provide underwriting concerns
the loading site must be appropriately prepared prior to and during
loading. Ballasting of the barge is a critical concern here.
The experience of the transporting operator should be investigated
and the degree of liability should be understood. Consideration should
given to including wording in the policy addressing the non-waiver
of liability if that is the case.
- VESSEL USED
As stated earlier, the barge must be of the proper specifications
for the size and use of the crane and it must also be in sound
The barge must also be secured in a fashion appropriate for the sea
conditions at the job site. If the nature of the work to be performed
is such that the barge will need to be moved often, then it will be
critical to have qualified marine operators employed and proper
procedures being maintained.
Based upon the size of the crane and the work to be done, the barge
should be equipped with appropriate hardwood mats to not only provide
for protection to the barge, but also allow for needed securing and
maneuvering of the crane on the barge. These mats will also provide
needed weight distribution.
When the choice of a barge is made, often just the size and weight
of the crane and the anticipated weight of the lift is taken into
consideration. Additional factors which may prove very critical is
the actual work being performed and area needed include:
IV. MANAGEMENT PRACTICES AND TRAINING
The overall approach and attitude of management is the most critical
element of underwriting the crane contractor. The underwriter must be
satisfied that effective administrative experience and controls are
Central to this issue are:
- Experience of the management team, not only in crane operations in
general, but in the type of operation in which the insured is currently
involved. This is particularly important in specialized operations
such as heavy rigging and material handling. A job list or bid list
will afford a good insight here as well as verification of a sound
- A review of current audited financial statements should reflect historical profitability and a positive cash flow.
- The use of only fully trained, qualified and experienced
operators and subcontractors. Training should be ongoing as job
and the equipment used change over time. Use of operators
certified by an independent accredited third party is highly
- Formal accountability program in place (raises - promotions -
continued employment depends on following company policies and safe
- A formal safety program, including weekly meetings and accident reviews.
- Pre-employment and on-going physical screening of all employees.
- Certificates of insurance required of all subcontractors within the insured's control to monitor compliance.
- Ownership involvement in day-to-day operations.
Company operating policies and procedures should define what can be
considered a critical lift, and the procedures that must be followed
critical lift can be made. All critical lifts should be pre-engineered
relative to both the load and the equipment to be used.
- Policies and procedures on classifying crane lifts such as, but not limited to, regular lifts, permit lifts and critical lifts.
- Policies and procedures describing risk mitigation tools to be used for lifts other than regular lifts.
- Policies and procedures for the use of a lift director for all lifts other than regular as well as pick and carry lift.
- Pre-lift jobsite engineering including identification of
existing and potential hazards, such as: soil conditions and stability;
weather; earthquake and flood; and ground water run-off.
- A survey of any over-the-road exposures due to equipment in
transit. (e.g.: bridges, overhead restrictions and obstructions and road
- Proper storage and security of any equipment to be left at the jobsite.
- A formal equipment inspection program performed weekly and prior to all critical lifts.
- Accurate load weights established during pre-lift engineering
and verified at the time of lift. Do not rely upon invoice weights, as
have been understated to avoid additional shipping charges.
- Pre-qualification of any subcontractors used for specialized
rigging or hoisting with certificates of insurance. Verify adequate
coverage as well as our insured named as Additional Insured.
- Control of any unique or unusual exposures, such as: blasting,
underground work, waterborne operations, pick and carry lifts or tandem
Cranes wear out and break. Crane maintenance and inspection is critical
in avoiding accidents. Good accounts will have written policies and
procedures on maintenance and inspection with good written records.
Maintenance should meet or exceed the crane manufacturer’s requirements.
Inspections will meet or exceed the requirements of either 29CFR
1926.550 or the applicable volume ASME B30. When looking at inspection
look at the inspection work sheet and not the window sticker. Then look
to see if deficiencies have been corrected. Also, look for evidence of
"pencil whipping" on the work sheet, check marks indicating something is
"OK" and the crane does not have one are signs of inadequate crane
SAFETY LAWS AND REGULATIONS
Various state and/or federal standards or regulations have been
developed that can further enhance the safety of crane operations.
procedures can be divided into five (5) general categories -
Most of the current rules and regulations involving cranes seem to deal
with personal safety matters - avoiding injury to the general public
- Operator training
- Crane certification
- Maintenance and inspection
- Electrical procedures
The Occupational Safety and Health Administration (OSHA) recognized in
2002 that there was a need to establish construction industry standards
for the operation of cranes. OSHA subsequently announced in the Federal Register
on July 16, 2002 [Volume 67, Number 136] its
intent to establish a Cranes Rulemaking Committee. The Committee’
purpose was to investigate issues associated with the development of
proposed revision of the existing construction safety standards found in
the Code of Federal Regulations (CFR), Sec. 1926.550 which dates
back to 1971.
With the exception of two revisions -
the Committee has made no substantive changes.
- one in 1988 dealing with the conditions under which employees on personnel platforms may be hoisted; and
- another in 1993 stating that all employees shall keep clear of loads about to be lifted and of suspended loads
Three basic divisions were believed to be needed:
The Committee has some key issues for discussion confronting it including -
- General Industry;
- Construction; and
Any underwriter of cranes knows that this list is vitally important in
the insurance of cranes. Unfortunately, until rules are established,
virtually every one of these items is missing from today’s crane
- The identification/description of what constitutes a crane or
derrick for the purposes of determining equipment that will be covered
by any new rule.
- Qualifications of individuals who operate, maintain, repair, assemble or disassemble cranes or derricks.
- Work zone control.
- Crane operations near electric power lines.
- Qualifications of signal persons and communication systems.
- Load capacity and control procedures.
- Wire rope criteria.
- Crane inspection and certification records.
- Rigging procedures.
- Requirements for ‘fail-safe’, warning and other safety related devices/technologies.
- Verification criteria for the structural adequacy of crane components.
- Stability testing requirements.
- Blind pick procedures.
V. OPERATOR TRAINING
Crane operator training is intended to reduce or eliminate the
possibility of human-related factors in crane accidents. In the US, the
National Safety Council [NSC] has set the following minimum qualifications for crane operators in their Accident Prevention
Manual for Business and Industry: Engineering and Technology. 10th Edition-
When one considers that the person operating the crane is operating one
of the most expensive and critical pieces of equipment on the job
site, words like 'adequate understanding' and 'satisfactory skill' -
both undefined terms - do not give much comfort to the insurance
underwriter. One should obtain additional information about how a
particular company selects and trains its crane operators.
- Be of legal age in the geographic area where they operate the crane
- Speak and understand written English
- Pass a physical examination including an eye test for depth perception
- Have adequate understanding of the crane they are operating
- Demonstrate satisfactory skill in operating the crane
Available industry loss data indicates that almost 80% of all crane
losses can be attributed to operator error. However, the training and
certification of crane operators leaves much to be desired.
Most operators have received their training from one of the following -
All are limited in scope, require a minimum of classroom education, and lack on-going education.
- Vocational or union sponsored schools
- Individual company training programs
- On-the-job training
- By one's 'seat of the pants'
In the mid-1980’s a not-for-profit entity - Board for Crane Operator Certification, Inc. - founded in San Antonio, Texas, attempted
to establish the basis for crane operator certification. They created this entity with the following expressed purposes -
These noble efforts, which included a written test and 'hands-on' field
testing, has not had a dramatic impact on the reduction of crane
accidents. As previously stated in this report, standardized and
universal operator certification is still an elusive goal. All too
the technological advances of the crane manufacturer have out-raced the
continuing education required to achieve proficiency with new
iterations of equipment.
- To promote and advance the professional status of crane operators.
- To improve proficiency of the operator, and generate job safety awareness.
- To assist employers in ascertaining operator knowledge and experience.
However, in 1996 the National Commission for the Certification of Crane Operators (NCCCO)
started certifying mobile crane operators
in 4 categories. Today they also certify tower crane and overhead crane
operators as well and are currently developing certification
programs for riggers and crane signal persons. Certification by an
independent and accredited third party is considered by most crane
professionals as the best approach to crane safety. However
certification by itself does not assure safety, a full accountability
along with crane operator certification will reduce accidents.
In October 2007 the NCCCO announced that it had been awarded
accreditation by the American National Standards Institute (ANSI) for
three of its crane operator certification programs
Accreditation by ANSI to the ISO/IEC 17024 International Standard for
organizations that certify personnel came after rigorous onsite
and field audits by ANSI assessors of NCCCO's management systems and
psychometric procedures. Singled out for particular mention by
ANSI were the preparation, administration and execution of NCCCO's
practical exam program. ANSI applauded the manner in which the tasks
for the practical exam had been selected, the objectivity and clarity of
the criteria that had been established for practical examiner
observations, and the systematic way examiner observations had been
integrated into the scoring process.
- Mobile Crane Operator
- Tower Crane Operator
- Overhead Crane Operator.
VI. LOSS CONTROL
Loss control personnel assigned to be the underwriter’s eyes and ears at
the job site must be familiar with cranes, their operation
and the operators. This should be required for any initial survey and
follow-up visits due to the highly technical and specialized
nature of the crane business, and is a must for any specialized lift
Equipment Design and Manufacturing Features
- The employment screening process for heavy equipment operators
should include a drug screen test, in addition to the Motor Vehicle
Record [MVR] review, which is already required.
- The background review should include verification of any required education or certification requirements for heavy equipment
operators, as well as verification of critical prior employment experience.
- The qualification testing procedures for new-hire crane
operators should be documented and formalized. Alternatively,
certification, such as NCCCO certification, could be considered.
If internal qualification is used, it would be recommended that
the testing include the following elements:
- Description of operator’s responsibility for maintenance of the crane and for safety inspections, including the types of reports
to be completed and frequency of inspections.
- Description of the criteria to be utilized for the visual inspection of wire ropes and cables.
- Description of the importance of the capacity chart.
- Demonstrate how the crane’s capacity chart is used to
determine the crane’s lift capacity, at different operating radii or
- Company definition of a Critical Lift
- Description of the importance of the Critical Lift Plan and what procedures have to be followed before a critical lift is made.
Crane Inspection, Testing & Maintenance
- Cranes should have a permanent, durable plate with the:
- Manufacturer’s Name
- Model number
- Serial number
- Year built
- All crane components and attachments such as outriggers,
counterweights, jibs and boom sections should be clearly marked to show
are specifically designed to work with the crane.
- Any components or attachments designed, manufactured or
altered by anyone other than the Original Equipment Manufacturer (OEM)
be certified by an independent, qualified engineer.
- Cranes should have a load chart that is attached to the cab
and in a location easily accessible and visible to the operator from the
control station. The chart should have the following information:
- Crane model number
- Crane serial number
- Date of manufacturer
- Load rating for the main boom at all stated operating radii, boom angles, boom lengths and boom types
- Jib rating
- Wind velocity operating limits
- Low temperature operating limits
- The operator’s cab and control station should be:
- designed and built to protect against the elements
- designed and built to provide the operator a clear and
unobstructed view of the load and boom point, visibility to either side
as clear a view of the job site as possible
- fitted with a lock to prevent unauthorized access/entry
- equipped with adequate lighting
- equipped with windshield wipers to ensure the operator’s normal viewing area is clear
- equipped with a windshield defroster
- equipped with a fire extinguisher
- designed so that the controls are located within easy reach of the operator
- designed so that the controls are clearly marked to indicate their function
- designed so that the controls move in the direction of the desired load or crane movement
- Cranes should be inspected and tested in accordance with the
industry and/or regulatory standards. Testing is also necessary to prove
that any work carried out on the crane has been done properly and
that the crane is capable of performing safely.
- Inspections should be done by a certified crane inspector and should take place:
- Prior to initial use
- After any accident
- After every major repair, overhaul or alteration
- After major modifications
- After every major assembly or strip down for transportation
- Prior to use if it has been idle for at least 6 months
- As much as practical cranes should be inspected daily as
well as being observed during operation for any signs of damage or
- Cranes should be maintained in accordance with the
manufacturer’s recommended schedule. Cranes should be maintained as
the work resulting from the periodic inspections of the equipment
or observations during operation.
- The maintenance program for the cranes should include the following elements.
- Description of inspections to be performed on the cranes,
frequency of inspections, responsibility for completion, and reports to
- Identification of preventative maintenance required for the cranes, as recommended by the manufacturer (or by the operator), and
a tracking system developed to ensure that critical maintenance is completed.
- Identification of who has the responsibility for completing the maintenance and whether inside mechanics or outside contractors.
- There should be a documented process for the review and implementation of any service advisories or alerts that may periodically
be received from the manufacturer.
- A maintenance file should be kept for every crane.
- There should be a log book with the crane serial number
that is kept throughout the working life of the equipment. The log book
should contain the details of all maintenance as well as revisions,
modifications, inspections, tests, repairs and incidents.
- The log book should be transferred with the crane if it is sold.
- Cranes should be operated only by trained, experienced and competent operators.
- For operations in coastal areas that are subject to storms or hurricanes, request a copy of the Hurricane Contingency Plan for
the operation. This should also be reviewed by underwriters or Loss Control for comments and recommendations.
- The company should have a documented Safety Program, which
should include regular safety meetings (daily tool box, weekly and
monthly meetings), as well as periodic management review of safety
statistics & losses. Safety training topics should be
developed and planned, based upon risk assessment and loss
- The company should have an Incident Review Program under
which losses are investigated to develop corrective and preventative
action to avoid recurrence. The person conducting the loss/
incident review should be familiar with the company's operating and
safety procedures and comment on whether or not there was any
noncompliance with these procedures. Noncompliance with the
company’s documented safety procedures can suggest possible
- Selection of a crane for any lifting operation should be made based on a number of factors:
- type of lifting to be done
- weight, dimensions and lift radii of the heaviest and largest (footprint) load
- maximum lift height
- number of lifts and at what frequency
- whether the load to be lifted has to be walked or carried
- whether the load to be lifted has to be held in the air for long periods of time
- environmental (ground, weather, access and operating areas, etc.) conditions
- any physical or operational obstacles
- The crane selected should be able to make all of its lifts in its normal configuration. Cranes should have at least a 5% safe
working margin based on the load capacity of every lift.
- Cranes should only be rented from reputable firms or contractors
- Crane requirements given the tasks should be clearly defined (written) in the rental/lease agreement
VII. CLAIMS ADJUSTMENT
The almost indispensable use of cranes in the construction industry has
led to a number of crane accidents, some of which have been
the most spectacular in the entire construction industry. It is for
this reason that the prudent underwriter should work with the
company's loss control and claims departments when underwriting an
account with crane exposures.
Some policies require that the carrier provide a replacement crane until
the damaged crane is fully repaired and back in service.
In such cases underwriters should understand that cranes manufactured
overseas take much longer to obtain parts than cranes
manufactured in the United States.
Internet salvage/auction companies create an online marketplace for
salvage buyers and sellers to come together in a transparent
environment and let them determine fair market value and allow product
expertise and technology to bring more buyers to each auction.
These companies are serving to eliminate potential conflicts of interest
when disposing of assets and have proven results that are
gaining the trust and confidence of insurance professionals, risk
managers and asset managers.
THINGS TO LOOK FOR IN A REPAIR FACILITY
Cranes damaged in an accident should only be repaired by a factory authorized dealer or a repair facility with full engineering
capabilities that can assume the role of manufacturer. Some common criteria for selecting a repair company are:
- Reputable Repair Service Company
- Insured and Bondable
- Expertise, Facilities & Resources
- Professional Engineering Capabilities
- Reverse Engineering Capabilities
- Project Experience
- Welding & Fabrication
- Testing, Inspection & Certification Documentation
- Full Fabrication, Electrical, Electronic, Mechanical & Hydraulic Service
- Capabilities (Turn-Key)
- Knowledge of Laws, Regulations & Standards
- Warranty for Repairs
- "Out of the Box" Thinking
As mentioned in the Introduction, insurance of cranes under a
contractors equipment policy is one of the most complex areas of
inland marine insurance. The Committee that developed this report
endeavored to provide a broad perspective into crane insurance.
As one gets involved in this niche of contractors equipment insurance,
one is sure to find nuanced and unique coverage extensions
and endorsements that will challenge the underwriter’s creativity and
decision making. Therefore, it is imperative to fully
understand an insured’s operation when evaluating its insurance needs,
and seek additional advice and counsel when there are gray
areas of coverage intent. To this latter point, this report contains
considerable additional information and reference sources in
the Appendix section.
IX. ADDENDUM - LESSONS FROM LOSSES
Before we cite several examples of losses, it might be best to summarize some of the most common types of losses:
- Overloading of the boom due to improper use of capacity chart, (sometimes due to not knowing what the load actually weighs)
- Boom cratering, due to contact with load or other structure
- Boom failure due to side loading of the boom during a lift
- Crane overturning, due to ground subsidence/ collapse, improper matting, improper use of outriggers, etc.
- Failure of lifting slings, rigging, etc. and/ or improper rigging
- Failures due to improper maintenance of safety equipment, such as boom limit switches, anti two blocking device, mechanical
level indicator, etc.
A 60 foot long boom of a crane working on a Florida highway came
crashing down blocking the highway and causing a multiple car
accident. The crane operator was thrown from the cab as it broke free
of its base and overturned. The crane was attempting to
lift a metal plate while simultaneously ‘vibrating’ it to attempt to
dislodge it. OSHA inspectors determined that the crane had
a crack under the cab assembly, and that hydraulic fluid was leaking,
allegedly causing a failure of the extended boom.
A well publicized crane loss, the crane collapse during the construction
of Milwaukee’s Miller Park baseball stadium, is a prime
example of lifting operations being conducted when the prevailing winds
were gusting to 26 mph at the time of the collapse. The
567 foot tall crane called ‘Big Blue’, reportedly the largest in North
America at the time, came crashing down while lifting a
section of a retractable roof panel weighing some 400 tons into position
over right field. In addition to the physical damage
and loss of life, the claims was exaggerated in that the opening of the
stadium was delayed a year due to acquisition of a
replacement crane that was located in the Middle East.
A lattice boom crane, while attempting to move a radio station’s antenna
across the roof, crumpled not only causing substantial
damage to the crane, but also disrupting traffic, breaking a water pipe
and knocking the radio station off the air for an extended
period of time. Here, the underwriter not only had to contend with
physical damage to the crane, but had also provided time element
coverage and had to respond to the loss of air time and media revenue.
In the course of construction work on a bridge spanning a shipping
canal, a multiple crane pick using five (5) cranes [two 400 ton
cranes with spreader-bars - one 600 ton lattice tower crane - two 200
ton telescope jib cranes] were attempting to lift a 4oo ton
section of the bridge. As the bridge section was being lifted, the 600
ton crane collapsed and tipped over. The bridge section
slid out of the spreader and crashed to the ground. The chain reaction
resulted in all five cranes being severely damaged (several
a total loss), the channel being blocked for a period of time, and the
opening of the roadway being delayed resulting in substantial
contractor delay penalties.
A mobile crane with lifting capacity of 80 tons was required for work on
a construction site. Its lifting capacity without its
outriggers deployed as reduced to 43 tons. In positioning the crane,
the crane operator had to cope with tight operating conditions.
The chosen position was on a slightly sloping roadway which prohibited
the front left outrigger from being fully deployed. The rear
left outrigger extended into the construction site at an exaggerated
angle on a steep slope. The two right outriggers were fully
deployed. Once in this awkward position, the operator began to extend
the boom and swing it in the direction of the load. Even before
attaching the load, the crane toppled over resulting in damages to the
crane approaching $500,000.
A high-rise office building under construction in a city center was the
site of the boom of the tower crane buckling under load and
collapsing onto the uppermost floor of the building under construction.
The 20 ton counterweight of the tower crane crashed through
the roof of an adjoining luxury hotel across the street, smashing into
the boiler room on its upper floor further damaging the hotel.
A 96 ton crane had to be brought in to conduct the salvage work
resulting required which created a time element exposure for the hotel
which had to be closed for several weeks.
X. APPENDIX OF RELATED WEB SITES - ASSOCIATIONS - VENDORS
Link-Belt Construction Equipment Company
2652 Palumbo Drive
PO Box 13600
Lexington, KY 40583-3600
Terex Cranes (Terex, Demag, P&H, PPM, Koehring, Lorain, Peiner, Comedil)
106 12th Street S.E.
Waverly, IA 50677
Manitowoc Cranes Inc. (Manitowoc, Grove, National, Krupp, Potain)
2401 South 30th Street
Manitowoc, WI 54220
10845 Train Court
Houston, TX 77041
Liebherr Cranes, Inc.
4100 Chestnut Ave.
P.O. Box Drawer O
Newport News, VA 23605-0200
Tadano America Corporation
333 Northpark Central Dr., Ste. Z
Houston, TX 77073-6088
Favelle Favco Cranes USA, Inc.
4 Mile East, FM106 Port of Harlingen
P.O. Box 3049
Harlingen, TX 78551-3049
3000 S. Austin Ave.
P.O. Box 1609
Georgetown, TX 78627-1609
QMC Hydraulic Cranes and Equipment
18071 Mt. Washington St.
Fountain Valley, CA 92708
Elliott Equipment Company
4427 S. 76th Circle
Omaha, NE 68127
Altec Industries, Inc.
210 Inverness Center Drive
Birmingham, AL 35242
VALUING CRANES & Construction Equipment:
McGraw Hill Construction (fee based publications)
- Cost Guides
- Value Guides & Auctions
- Serial Number Guides
- Regional Rental Rates
- Specifications Reference & Data
ORGANIZATIONS / ASSOCIATIONS:
AEM (Association of Equipment Manufacturers)
AED (Association of Equipment Distributors)
SCRA (Specialized Carriers and Riggers Association)
CCAA (Crane Certification Association of America)
FLCOC (Florida Crane Owners Council)
Association of Crane & Rigging Professionals
NCCCO (National Commission for Certification of Crane Operators)